F&P Healthcare leads NZ shares lower
Kiwi manufacturer tips earnings cut in face of US litigation
New Zealand shares fell, led lower by Fisher & Paykel Healthcare and Z Energy, while A2 Milk rose amidst new Chinese e-commerce legislation. The S&P/NZX50 Index fell 55.91 points, or 0.6 per cent, to 9257.29. Within the index, 21 stocks rose, 19 fell and 10 were unchanged. Turnover was $97.2 million. “It’s pretty light volume in a market that’s trading at an all-time high, effectively, so it’s not surprising to see a bit of profit-taking come out on the back of an amazing August for most people,” said Rickey Ward, NZ equity manager at JBWere.
Fisher & Paykel Healthcare led the index lower, dropping 3.9 per cent to $15.75.
It warned the cost of contesting the latest patent allegations from rival ResMed will cut annual earnings by as much as $10m in a far-ranging dispute across multiple jurisdictions.
F&P said it will contest complaints in the United States International Trade Commission (ITC) and US District Court for the Southern District of California, and cut forecast profit to between $205m and $210m for the year to March 31 from a previous forecast of $215m due to the cost of defending the litigation.
“When you start to have bigger players issuing litigation, it means you’re annoying them — it’s a comingof-age for Healthcare,” Ward said.
“They clearly are on the radar for incumbents, and this is a way of life for them. Big companies do this all the time so investors have got to get used to it,” the equity manager said.
Z Energy dropped 2.2 per cent to $7.05, Ryman Healthcare fell 1.9 per cent to $13.82 and Trade Me Group declined 1.9 per cent to $5.27.
Sky Network Television was the best performer, up 2.3 per cent to $2.20. Synlait Milk, which supplies A2, rose 1.6 per cent to $13.
A2 Milk Co rose 1.4 per cent to $12.80. It said it welcomes new e-commerce law in China, as it awaits further information.
A2 said the new law creates a broad framework for e-commerce, and it will keep working with its partners to respond to the law and yet-to-be-released guidance.
“Today’s announcement didn’t provide any clarity about how you value the changes in the law around e-commerce, it’s a difficult company to get insight into but the momentum is very good,” Ward said. Restaurant Brands New Zealand
gained 0.1 per cent to $7.71.
It is exiting its Starbucks coffee business after two decades of operation after the US brand failed to take off as expected, selling the fixed assets of the chain for up to $4.4m to local hospitality business Tahua Capital. Summerset Group was unchanged at $7.78. It plans to sell up to $100m of seven-year, fixed-rate bonds as it cuts it reliance on bank debt. The bond offer is expected to open the week of September 10 and Summerset said it would provide more details at that time.